How Do You Insure Against Cybercrime?

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://blogs.wsj.com/experts/2015/04/21/how-do-you-insure-against-cybercrime/

Cyber has become one of the most dynamic and frequently discussed new risk
dimensions, fueled by highly publicized incidents of data breaches, such as
the targeting of Sony Entertainment 'sSNE +1.35% networks, apparently over
a satirical comedy portraying North Korea’s leader, or an attack on French
broadcaster TV5Monde’s channels and social media accounts in early April by
hackers claiming to be from Islamic State in Iraq and the Levant (ISIS).

As a result of such cases, organizations are not only increasing their
protection against cybercrime, but are also including cyber-risk into their
risk-management framework. “There are only two types of companies: those
that have been hacked and those that will be,” to put it simply and in the
words of former FBI director Robert Mueller.

Cyberinsurance has grown out of recognition that both cybercrime and data
privacy rank among the most worrisome risks faced by organizations today.
So far the insurance industry considers cybercrime as borderline insurable,
quite similar to terrorism.

To be able to step up to the challenge of making cyber-risk more insurable,
we need to understand the risk of aggregation (be it from prolonged service
interruption following a cyberevent, or widespread data privacy breaches)
and be able to distinguish between random events versus targeted
cyberterrorism or even government sponsored attacks.

Simultaneously, this is not just a challenge for insurers. It requires the
cooperation between government agencies, academia and specialized IT firms
to provide the technical and regulatory framework to make cyber-risk
insurable.

The insurance industry will continue to be a partner and help organizations
get back on track when things go wrong: We estimate that by 2025,
cybercoverage will be in every retail, commercial and industrial insurance
policy.

Following on from that it will be interesting to see how societies in the
future will react to cyber-related data privacy breaches. Will younger
generations develop the same attitude toward personal data protection as
our generation has done, or will standards change as personal data becomes
even more widely available (for example, from wearable technology or
driverless cars)?

Will cybersecurity become the norm, or will hackers continue to find ways
to penetrate systems, and with what consequences? Only time will tell.

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